Can any mortgage advisors tell me whether I’d actually get one?

big_gus

Hi Folks,
Bit of a long-winded one but will try and keep it short. I currently own (and live in) a large Guest House. There is a small property attached (previous occupants owned entire building(s) but split into two when selling). They rent this out to another family who are shortly leaving and I would like to purchase it and once again have one entire home. Purchase price would be around 180-200k.

My situation is that I currently have two mortgages. One here (£212k outstanding, down from £338k when purchasing in 2008...current value is around £500k-£550k) and another buy-to-let property which has tenants in and they cover the mortgage, easily.

The second facet to this is that if we could move into the adjoining property it would mean the part of the Guest House we currently live in would become free and therefore would revert back to guest accommodation. Our calculations show this would bring in around 15k extra per annum which would comfortably cover any new mortgage. 

Before wasting the bank’s time...is it feasible/possible for me to acquire another mortgage? What is the ceiling on the loan-to-value percentage? How much would be required as a deposit IF it was doable?

“Official” net income (as shown in the accounts) from the business will go against us as it only shows - on average - around 15k per annum. These aren’t quite true figures and aren’t the extent of income (for instance, the mortgage on the buy to let property is only £300pcm but we receive £1400pcm).

Anyway, apologies for length of post. Just wanted to include as many details as possible to garner a genuine response. Any help greatly appreciated. Thank you. 

ACG

In short no. 
Your income is not going to support what you need. If your income was higher (or without wanting to make assumptions but you declared what you actually earned fully) then there is some potential. 

However, it will not be straight forward. You will either need to:
1) Raise the money against your current home in order to then give you the money to buy the other part of the building but then renting out part of the property could become a problem and a breach of terms.
2) Raise a bridging loan to buy the other part of the property, combine the 2 and then remortgage the full amount on to a new mortgage but again the renting part might be a problem with most lenders. 

In any event, £15k is not going to get you anything more than maybe £75k. If the income was there, there is potential but it would not be for every lender and it would not be straight forward. 

big_gus

Thanks for your reply. Forgot to add, I could put down around 50k as a deposit. But sounds like that wouldn’t help much. 

The owner did offer a deal a few years ago (I’m not a fan of renting) whereby I paid the going rate for rent (I think it was around £800pcm) and after a year he would take that off of the agreed asking price if I were able to buy...?

ACG

Still not enough income. 
£800 x 12 = £9,600 + say £75k mortgage + £50k deposit = £135k (ish) - Still £30-50k shy of what you need. 

That is before you even take into account your own mortgage. You are looking for a total mortgage of about £340k on an income of £15k that is 22x income. Most lenders will do no more than 5x income. 

I think you need to knock it on the head.

Thrugelmir

big_gus said:

They rent this out to another family who are shortly leaving and I would like to purchase it and once again have one entire home. Purchase price would be around 180-200k.

Bide your time and the property price may fall.